Ezel / IRS Rulings / 1248017
Chief Counsel Advice 1248017 Released November 30, 2012 Advice

CCA 1248017: Chief Counsel explains which partnership partners are bound by a settlement

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This page covers one taxpayer's ruling from 2012, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2012
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that a tax matters partner could bind certain partners through a partnership settlement only within the limits of section 6224 and its regulations. Notice partners had to sign if they, and indirect partners holding interests through them, were to be bound. Partners who did not settle would remain subject to a final partnership administrative adjustment disallowing the described losses, while settled partners would not be subject to that adjustment.

Ruling snapshot

  • Question: Which partnership partners must sign a settlement agreement to be bound, and what happens to partners who do not settle?
  • Outcome: Advice
  • Key authorities: IRC §§ 6224 and 6226; Treas. Reg. § 301.6224(c)-1

Full text (IRS public release)

ID: CCA-409144-12 Number: 201248017
Release Date: 11/30/2012
Office: ---------
UILC: 6224.01-01

From: --------------------
Sent: Monday, April 9, 2012 2:41 PM
To: --------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------

Subject:906 Question - ------- -

Under section 6224(c)(3) the TMP can only bind partners with less than a 1 percent interest in a
partnership with more than 100 partners. Also, under Treas. Reg. 301.6224(c)-1(b), if the TMP cannot
bind a pass-thru partner, he cannot bind any indirect partner holding an interest through the pass-thru
partner. Under the last sentence of section 6224(c)(1), a settlement agreement by a pass-thru partner
binds its indirect partners.

Thus, all notice partners must sign if they (and any indirect partners holding an interest through them) are
to be bound.

Any partners who do not settle would be bound by an FPAA disallowing losses in years 1, 2 and 3.
Settled partners would not be subject to the FPAA. See I.R.C. 6226(d)(1)(A). ------------------------------------

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